US Postal Service 2012 Annual Report Download - page 98

2012 Report on Form 10-K United States Postal Service- 97 -
The risks of participating in these federal retirement plans are different from single-employer retirement
plans in the following aspects:
 Assets contributed to the plans by one agency may be used to provide benefits to employees of
other participating agencies.
 If a participating agency stops contributing to the plans, the unfunded obligations of the plan may be
borne by the remaining participating agencies.
 Postal Service participation in the federal retirement plans is required by law. If the Postal Service
were permitted by a change in law to stop participating in some of the Federal retirement plans, it
may be required to pay those plans an amount based on the underfunded status of the plan,
referred to as a withdrawal liability if such a liability exists at that time.
Factors that could cause the Postal Service to make significantly higher future contributions to these plans
include unfavorable investment performance, changes in demographics, and increased benefits to
participants. In addition, changes in law or regulation could significantly impact future required
contributions. At this time, it is not possible to determine the amount of additional future contributions, if any,
or whether any material adverse effect on the Postal Service’s financial condition, results of operations or
liquidity would result from participation in these plans.
The CSRS plan is less than 65% funded, and the Postal Service made no contribution to the CSRS plan in
2012, 2011, or 2010. The FERS plan is greater than 80% funded, and for 2012, 2011, and 2010, the Postal
Service provided more than 5% of the total plan contributions for FERS from all employers (as disclosed in
the OPM’s Civil Service Retirement and Disability Fund Annual Report). Because these government-
sponsored retirement plans are not subject to the rules and regulations of the Pension Protection Act of
2006, typical plan measurements such as, zone status, and financial improvement plan status, or
rehabilitation plan status are not available for these plans.
EMPLOYEE / EMPLOYER CONTRIBUTIONS
As required by law, the Postal Service contribution rate was 11.9% of base salary for current FERS
employees for the twelve months ended September 30, 2012, and 11.7% and 11.2% of base salary for
FERS employees for the twelve months ended September 30, 2011 and 2010, respectively. For employees
covered by the FERS system, the Postal Service is also required to contribute to the TSP a minimum of 1%
per year of the basic pay, and to match a voluntary employee contribution up to 3% of the employee’s basic
pay, and 50% of an employee’s contribution of between 3% and 5% of basic pay.
P.L. 109-435 suspends until 2017 the employer contributions to CSRS that would otherwise have been
required under Title 5, Section 8334(a)(1) of the United States Code. At that time OPM will determine
whether additional funding is required for the benefit of postal retirees. As a result, the Postal Service
contribution rate for CSRS and Dual CSRS was zero in 2012, 2011, and 2010.
The Postal Service recognizes expense for the legally-required contribution for each period, and records a
liability for any contributions due and unpaid at the end of a reporting period.
EXPENSE COMPONENTS
The following table lists the components of total retirement expenses included in “Compensation and
Benefits” expense in the Statements of Operations for years 2012, 2011, and 2010.
Retirement Expense
(Dollars in millions)
FERS
$ 2,980 $ 2,983 $ 2,904
Social Security 1,853 1,856 1,856
FERS Thrift Savings Plan 1,021 1,040 1,049
Total Retirement Expense $ 5,854 $ 5,879 $ 5,809
2012 2011 2010